Skip to content
Search

Latest Stories

India proposes tax hike for diesel vehicles

Nitin Gadkari said he plans to propose imposing an additional 10 per cent tax on diesel engine vehicles

India proposes tax hike for diesel vehicles

INDIA's road transport minister on Tuesday (12) said he will propose an additional 10 per cent tax on diesel vehicles and warned automakers of even higher levies to come to force them away from diesel-burners and cut fuel emissions and pollution.

Nitin Gadkari made the comments at the Society of Indian Automobile Manufacturers (SIAM) annual conference in New Delhi, where executives of Tata Motors, Mahindra and Mahindra, Maruti Suzuki and foreign carmakers such as Mercedes and Volkswagen had gathered.


Gadkari said he will ask the finance minister later on Tuesday for an "additional 10 per cent" goods and services tax on diesel vehicles to tackle problems related to pollution. India currently imposes a 28 per cent tax and additional so-called "cess" is levied depending on the vehicles' engine capacity.

"Say bye to diesel soon, otherwise we will increase so much tax that it will become difficult for you to sell these vehicles," Gadkari told the conference.

"We have to leave petrol and diesel soon and walk on the new path of being pollution free ... There should be a diversification (by companies) as soon as possible," he said in a warning to automakers.

Gadkari's comments sparked widespread discussion among auto executives at the Delhi conference, with some describing the move to Reuters as a "bombshell" announcement. Mercedes India managing director, Santosh Iyer, said many customers still prefer diesel vehicles and any change in tax policies will lead to a shift in automakers' "portfolio strategy".

"We will need six-odd months to change our production planning processes but we can always vary and shift based on the demand," he said.

Pollution is a growing problem across India. Attempts to cut vehicular emissions, reduce fuel imports and curb stubble burning have not yielded great results in a country where the proposed coal power capacity is the highest after China.

The minister later wrote on social media platform X, formerly Twitter, the proposal to increase tax was not "currently under active consideration by the government".

Shares of automakers Mahindra and Mahindra, Tata Motors and commercial vehicle maker, Ashok Leyland dropped between 2.2 per cent and 2.5 per cent.

The finance ministry did not immediately respond to a request for comment.

Gadkari has also issued warnings at past SIAM conferences. In 2017, Gadkari told auto executives they should move towards electric vehicles (EVs), saying: "I am going to do this, whether you like it or not. And I am not going to ask you. I will bulldoze it."

India has in recent years promoted electric vehicle sales with tax incentives, though less than 2 per cent of India's nearly 4 million in car sales last fiscal year were EVs. The government has said it wants EVs to make up 30 per cent of total car sales by 2030.

The number of diesel vehicles in the world's third-largest car market has fallen to 18 per cent from 50 per cent a decade ago, Gadkari said, warning that just like India pushed through stricter fuel emission norms against opposition from the industry, it will similarly drive up taxes to push out diesel vehicles.

Veejay Ram Nakra, chief executive officer for the automotive division of Mahindra and Mahindra, told TV news channel ET Now that any change in duty structure "will certainly have an impact on volume of sales."

Ashok Leyland chief executive Shenu Agarwal told CNBC-TV18 that instead of taxation, more incentives should be given on electric, hydrogen and other alternate fuels.

(Reuters)

More For You

UK business district
The Canary Wharf business district including global financial institutions in London.
Getty Images

Economy grew 0.7 per cent in Q1 2025, fastest in a year

THE UK economy expanded at its fastest pace in a year during the first quarter of 2025, driven by a rise in home purchases ahead of a tax deadline and higher manufacturing output before the introduction of new US import tariffs.

Gross domestic product rose by 0.7 per cent in the January-to-March period, the Office for National Statistics (ONS) said, confirming its earlier estimate. This was the strongest quarterly growth since the first quarter of 2024.

Keep ReadingShow less
Rosneft in early talks to sell India refinery stake to Reliance

Reliance Industries chairman Mukesh Ambani (Photo: Getty Images)

Rosneft in early talks to sell India refinery stake to Reliance

RUSSIAN oil major PJSC Rosneft Oil Company is in early discussions with Reliance Industries to sell its 49.13 per cent stake in Nayara Energy, an Indian energy company that operates a 20-million-tonnes-per-year oil refinery and 6,750 petrol pumps, sources familiar with the matter said.

The deal, if finalised, would see Reliance overtake state-owned Indian Oil Corporation (IOC) to become India’s largest oil refiner. It would also provide Reliance with a significant expansion in fuel retailing, where it currently holds a relatively small presence.

Keep ReadingShow less
modi-trump-getty
Trump shakes hands with Modi during a joint press conference at Hyderabad House in New Delhi on February 25, 2020. (Photo: Getty Images)
Getty Images

Key issues in India, US trade talks

TRADE talks between India and the US have hit a roadblock over disagreements on duties for auto components, steel and farm goods, Indian government sources said to Reuters, dashing hopes of reaching an interim deal ahead of president Donald Trump's July 9 deadline to impose reciprocal tariffs.

Here are the key issues at play:

Keep ReadingShow less
Anil Agarwal

Vedanta Resources, which is based in the UK and owned by Indian billionaire Anil Agarwal, has been working on reducing its debt. (Photo credit: Getty Images)

Getty Images

Anil Agarwal’s Vedanta Resources signs £438 million refinancing deal

VEDANTA LTD said on Thursday that its parent company, Vedanta Resources, has signed a loan facility agreement worth up to £438 million with international banks to refinance existing debt.

The refinancing move, where old loans are replaced by new ones, often at better terms like lower interest rates, has led ratings agencies such as S&P Global Ratings and Moody's to upgrade their outlook on the company this year.

Keep ReadingShow less
Trump-Getty

Trump said that while deals are being made with some countries, others may face tariffs.

Getty Images

Trump says major trade deal with India may be finalised soon

US PRESIDENT Donald Trump on Friday said a "very big" trade deal could be finalised with India, suggesting significant movement in the ongoing negotiations between the two countries.

“We are having some great deals. We have one coming up, maybe with India. Very big one. Where we're going to open up India," Trump said at the “Big Beautiful Bill” event at the White House.

Keep ReadingShow less